Firms are buying up custom indexing solutions rapidly as possible in order to meet the excess demand coming from consumers, but also to prepare for the future. Investment experts and advisors believe there is a strong possibility that custom indexing will shake up the investment products space, the way ETFs redefined the early oughts. Olive Wyman expects custom solutions will capture $1.5 trillion of assets by 2025, over a 300% growth from the 2020 levels. Custom solutions are more flexible to address clients' desires, and they can be implemented to cater to ESG criteria more stringently than ETFs. However, the greatest advantage is their tax efficiency where stocks can be dropped for tax loss harvesting.
Finsum: Direct indexing has benefited from the rapid growth in fintech solutions, which have lowered minimums across the board.